Here's our summary of key economic events overnight that affect New Zealand with news China's expansion is wavering and that is either a worry, or more realistic, depending on your perspective.
But first, US initial jobless claims came in at the expected level of +383,000 and unchanged from the prior week. There are now 3.1 mln people on these benefits which was a drop of more than -100,000 and a post-pandemic low as more people regained employment, and more people found their coverage expiring.
There were two American regional factory surveys out for July overnight. The US Philly Fed survey is still expanding at a healthy rate but less so. The New York Empire State survey surged higher to a new record level. Both recorded much higher input costs - and employment gains.
The US Fed's industrial production data for June wasn't so expansionary but maybe that will come when the July data is in. However for June total industrial production rose at an annual rate of +5.5% despite a sharp drag from vehicle manufacturing in the month (due to the shortage of computer chips and one that is spiking buyer demand). All this may sound positive, but it is still -3.7% lower than for June 2019, so no recovery yet to pre-pandemic levels.
In South Korea their central bank kept its official rate (0.5%) and settings unchanged, but it wasn't unanimous and a hawkish tone is evident there too. Markets expect a rate rise or two before the end of the year, and the official growth forecast is maintained at well above +4%. And all this is happening as the pandemic is still affecting them.
China’s economy grew by an annual rate of +7.9% in the second quarter of 2021 compared with a year earlier to post a +12.7% growth in the first half of the year. But this was slower than most analysts had expected (+8.1%) and the weakness probably came in the June month and carried on into July. Speculation is rising that Beijing will juice up more fiscal support. Retail sales and industrial production levels beat estimates but growth rates for both were lower than in Q1. Electricity production was up +7.4% from a year ago, but only +7.0% higher than in June 2019, probably a better indication of how their economic activity is tailing off.
In pandemic news, there are reports that China is wavering in it support for its own Sinovac vaccine amid widespread unease about its efficacy. It is expected to adopt the BioNTech alternative as a "booster shot".
New cases in Indonesia are now higher than new cases in India (and nearly as high as Brazil). The epicenter of the pandemic has shifted closer to us - and more importantly, Australia. In NSW there were 67 new cases yesterday, and 840 active cases there. In Melbourne, there were very few new cases (+2). But Melbourne is back into a 'short, sharp' lockdown.
In Australia, an additional +50,000 full-time jobs drove their jobless rate down to 4.9% in June, its lowest level in more than a decade, but Sydney’s prolonged lockdown is expected to drag on the eight-month hiring spree and it may not stay down for long. Worryingly, their underemployment levels are up. The New Zealand jobless level was 4.7% in March and the June data will be released here on August 4, 2021.
Through all this, the APEC meeting is going on in Auckland, on a virtual basis - and almost anonymously. But today there is an "informal retreat" by the leaders of the 21 countries involved - and that is interesting because Chinese President Xi has confirmed he will be involved (like everyone else) in an off-the-record Zoom call.
Wall Street is lower and increasingly so as their session wears on with the S&P500 now down -0.7%. Overnight European markets all ended about -1% lower in an across-the-board selloff. Yesterday, the very large Tokyo market fell -1.2%. But Hong Kong ended with a +0.8% gain and Shanghai ended with a +1.0% gain and making back the prior day's drop. The ASX200 booked a -0.3% retreat. And the NZX50 Capital Index ended its Thursday session down -0.4%.
The UST 10yr yield starts today at just under 1.30% and down another -6 bps from this time yesterday. Long end rates are diving everywhere - except New Zealand. The US 2-10 rate curve much flatter at +108 bps. Their 1-5 curve is also flatter at +70 bps, while their 3m-10 year curve is also sharply flatter at +126 bps. The Australian Govt ten year benchmark rate starts today at 1.28% and down -3 bps from this time yesterday. The China Govt ten year bond is at 2.97% and up +2 bps. The New Zealand Govt ten year is now at 1.65% and unchanged.
The price of gold is now just over US$1829/oz which is up +US$5/oz from this time yesterday.
Oil prices have fallen back again today but by less than -US$0.50 so in the US they are now just under US$72/bbl, while the international Brent price is now just under US$73.50/bbl.
The Kiwi dollar opens today just over 69.7 USc and a drop of more than -½c from this time yesterday. Against the Australian dollar we are unchanged at 94 AUc. Against the euro we are a little lower at 59.1 euro cents. That means our TWI-5 starts today down -50 bps at 72.6 although that is back to where it was a week ago.
The bitcoin price is now at US$31,289 and down -4.8% from this time on yesterday. Volatility in the past 24 hours has been high at +/- 3.2%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
Daily exchange rates
Select chart tabs
26 Comments
KPMG singing from the PDK songbook
https://www.vice.com/en/article/z3xw3x/new-research-vindicates-1972-mit…
Bet it will be shunned by mainstream economics, but
Not saying the report is wrong (I'm doing my best to prepare myself and my family for a "less convenient" future) but in the interests of full disclosure it should be noted that although the report was authored by a KPMG employee it "...is not affiliated or conducted on behalf of KPMG, and does not necessarily reflect the views of KPMG."
I would suggest it is an important document. Anyone with a working brain cell will be able to understand that within a finite system, unlimited growth cannot occur. And, importantly, persistent efforts to drive growth against or through apparent limits, will only accelerate collapse. Coincidentally there are also reports appearing today that the Amazon forest is now producing more carbon than it absorbs in places and in total may only be carbon neutral now. So the endemic corruption in Brazil may have impacted the future of the rest of the world! But as I have suggested a few times in the past PDK, the rich and powerful act as though they are somehow immune from the laws of physics, and that their wealth and influence will protect them from the consequences of their actions. What we will see is a huge conflict, and much of it is very visible now, as governments get more authoritarian, and democracy and the rights of the ordinary people fall away. Politicians will con much of the public, but things do need to change.
But as I have suggested a few times in the past PDK, the rich and powerful act as though they are somehow immune from the laws of physics, and that their wealth and influence will protect them from the consequences of their actions.
The thing is, their wealth, influence, etcetera only has to last long enough for them to die, after that point I don't think they care!
Given the Rich and powerful tend to be older, there is a very good chance that majority of rich and powerful alive today will be well insulated for their remaining lifetime.
It will most certainly be the most disadvantaged and poor in society who will face the consequences of global climate change!
And yes the universe is unforgiving it is also completely unfair!
Curiously a lot of the early economic theory does not identify or discuss limits to growth. Indeed even today economists either wilfully ignore the subject or are apparently ignorant of it. So whenever this comes up, who ever is pushing the debate, is fighting against a tide of "conventional wisdom". Politically this can be and often is a career killer, so much of this argument becomes toned down, and even muted.
That made me laugh. Here's what Malthus said:
"No man can say that he has seen the largest ear of wheat or the largest oak that could ever grow; but he might easily, and with perfect certainty, name a point of magnitude at which they would not arrive. In all these cases therefore, a careful distinction should be made between an unlimited progress, and a progress where the limit is merely undefined”
Compare your comment. Perhaps you should study Malthus, and while you're at it, try this:
https://en.wikipedia.org/wiki/Wealth,_Virtual_Wealth_and_Debt
Interesting first sentence, eh?
Then this:
https://www.amazon.com/Overshoot-Ecological-Basis-Revolutionary-Change/…
Without fossil fuels, agriculture as we know it is dead. Just how many people can be supported beyond that, is dependent on social cohesion/cooperation. Malthus was entirely correct - only fossil energy being applied to food staved off the problem. But made it worse, now.
PDK - I usually skim over your comments thinking you are too pessimistic but I've also read somewhere that pessimists are better predictors than optimists. 50 years ago at Aberdeen University I idlily wondered who the Soddy was that the Chemistry dept boasted about. This quote from your link is worth repeating: ""In this book Soddy points out the fundamental difference between real wealth (consumables such as buildings, equipment, energy, food) and virtual wealth, in the form of money and debt. Soddy contends that real wealth is subject to entropy and will rot, rust, wear out, or be consumed over time, while money and debt (as artificial accounting devices) are subject only to the laws of mathematics, not the laws of thermodynamics. As debt compounding at some rate of interest, virtual wealth will grow effortlessly over time and without limit, instead of diminishing with use as does real wealth. Soddy uses actual occurring examples to demonstrate what he considers a major flaw of prevailing economic theory""
Thanks for that link.
You are simply wrong about that. The signs are there if you get the head out of the sand. For instance the trend of declining interest rates firmly represents a loss of wealth. Scarfie's rule of interest rates is that they will always find the maximum extractive yield. That maximum is well past.
pdk,
Not quite from your songsheet. " She told me that perhaps the most important implication of her research is that it’s not too late to create a truly sustainable civilization that works for all." That's the final sentence and contains a degree of optimism that you have never expressed here. As far as I can tell from your many posts and from Blip, societal collapse in inevitable and not far off.
Not really a big surprise, I have been picking 2050 for about 10 years now without any modeling or even reading about the topic. You only need to look at how the human race carries on and you know that ultimately it is doomed to fail eventually. 2050 is probably being optimistic now, sure it will get better for the very few from here but the masses its on a downward slope already in many parts of the world.
Nobody will deny that you can't grow forever as PDK regularly tells us. But timing is everything. The predictions are usually that the big crunch and resulting apocalypse "are 10 to 20 years away". I remember the self styled experts saying that ever since the 70s and it hasn't happened yet.
I read Kunstler's The Long Emergency when it came out nearly 15 years ago. It's an excellent book and well researched, yet his conclusion that we would certainly be living a medieval lifestyle by now was again wrong. One day he will be right, but most humans have shown they don't care about the long term, they are more concerned now about spending money they don't have on crap they don't need so as to impress people they don't know.
Can't remember who was peddling the Ivermectin "miracle" here the other day but they may want to read this https://www.theguardian.com/science/2021/jul/16/huge-study-supporting-i…
file it under misinformation
at least we can trust pfizer
https://www.justice.gov/opa/pr/justice-department-announces-largest-hea…
there are many studies on Ivermectin and most of them show an improvement https://c19ivermectin.com
You made an interesting point earlier on during the COVID crisis about the ethics of the vaccines Scarfie, and in thinking about it, I would suggest that the general human condition, that of hubris, has resulted in a high level of complacency. This fundamentally I think is what caused COVID (I am assuming here that however it happened was accidental, and it wasn't weaponised and deliberately released). This complacency has resulted in somewhat loose restrictions around so many things in the belief that 'shit' won't happen. But when it does the reaction is often towards panic. The rushing out of what were essentially 'experimental' vaccines and the near universal acceptance of them, is a clear example of this. Under these circumstances the worlds leaders have clearly wilfully ignored, or deliberately set aside established ethics fundamentals. A debate on the rationales behind this would be most interesting?
Through all this, the APEC meeting is going on in Auckland, on a virtual basis - and almost anonymously. But today there is an "informal retreat" by the leaders of the 21 countries involved - and that is interesting because Chinese President Xi has confirmed he will be involved (like everyone else) in an off-the-record Zoom call.
Setting the tone.
Earlier this week, Yellen on Monday called out China for imperiling "rules-based international order” constructed after World War II, along with Russia and Belarus. Recently, China refused to attend a G-20 meeting between Yellen and the other top global finance chiefs, forcing them to participate remotely.
She added that China was guilty of "unfair economic practices, malign behavior and human rights abuses." The US has been cranking up the pressure on Chinese firms, slapping sanctions on more firms that the US believes are involved with China's "genocide" in Xinjiang. Link
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.